January 12, 2017
The global 5G equipment market is expected grow at a compound annual growth rate of more than 32 percent from 2016 to 2020, according to Technavio’s latest report.
In 2013, approximately 35 million internet of things (IoT) connections were recorded in the United States. The proliferation of smartphones and tablets is fueling the growth opportunities of this market. In addition, telecom operators globally have observed rising demand for enhancing their network management capabilities to provide strong and stable connectivity solutions for smart applications.
In 2015, with a market share of 43 percent, the Americas dominated the global 5G equipment market, followed by the market area of Europe, the Middle East and Africa with 36 percent and the market area of Asia and the Pacific with 21 percent.
In 2013, approximately 35 million IoT connections were recorded in the United States. Smart solutions are widely used in different sectors, including energy and utilities, automotive, and logistics. International expansion by U.S.-based operators to provide IoT solutions will contribute to the market growth.
Nearly 80 percent of the enterprises in the United States have been using the IoT products and services, with the support of cloud platforms and data analytics to improve their business efficiency. With the penetration of the internet of everything, all industries are highly in need of efficient and reliable communications networks to process business operations. This trend is expected to continue during the forecast period. The United States is expected to witness the deployment of approximately 30,000 small cell nodes to handle LTE-A and mobile 5G applications.
The demand for a high-speed broadband access network has been increasing rapidly. In addition, the advent of several online applications and social media has pressured telecom operators to provide high-quality services. This has led telecom operators to expand wireless networks to meet the rising customer demand and implement power-efficient solutions to reduce power consumption. For instance, Verizon Wireless is looking to expand its power efficiency program to help deploy more small cell nodes for LTE networks and reduce money spent on energy by half of its current operating expense by 2020. Similarly, Sprint has decided to replace almost one-third of its cell sites with high-efficiency nodes.
Europe and Africa
Telecom vendors such as BT, Vodafone and Deutsche Telekom are competing to release their smart technology products and corresponding package services, which act as a key enabler to the growth of this market. Increased adoption of sensors in the automotive and healthcare sectors and growing number of connected devices drive the adoption of 5G technology in this region. Nordic regions such as Sweden, Norway, Denmark and Finland have an objective to develop smart cities and, hence, huge investments have been allocated for the development of 5G technology.
In some African countries such as South Africa, Kenya and Nigeria, smart mobility technology is widely used in applications such as fleet management, asset tracking, point of sale and pay-as-you-go insurance. The rapid adoption of mobile media by enterprises for promoting products and services and the increasing adoption of location-enabled searches by individual users are among the factors that will increase market growth.
Service providers are seeking to improve the performance of network connectivity to enhance user experience with the roll-out of LTE networks across the region. In addition, some of the African governments have established regulations to enforce smart monitoring of electricity and water meters, driving the use of 5G communications in the energy and utility sectors. Saudi Arabia is also set to invest $70 billion in various smart city projects and is planning to invest heavily in IoT technologies.
Asia and Pacific
The increasing rate of urbanization in the world’s most populated countries such as India and China is creating a demand for economic and environmental development. Government investments in the development of cities are rising and numerous central government programs designed to promote urban developments have been proposed.
Japan is the major contributing country in this region. Because of the early deployment of 4G LTE networks, Japan is a potential market for 5G technology. As service providers have already been offering effective 3G and 4G solutions, the demand for low-latency wireless mobile technology is expected to grow during the forecast period. Other potential countries in the region are South Korea and Singapore. Because Asia-Pacific has the largest penetration of mobile internet, it is expected to accelerate the demand for 5G services among individual consumers.
A few Asian countries including Indonesia, Malaysia and Thailand are investing in information and communications technologies to help develop efficient and enhanced public services in the interest of sustainable city management. These countries are investing in intelligent transportation systems, smart grid technologies, smart buildings and smart water management systems. In addition, Australia and China are investing in information technology infrastructure to support smart city projects designed to promote quality cities and accelerate economic growth.
Abhishek Sharma is a lead machine-to-machine (M2M) and connected devices research expert at Technavio. The report, “Global 5G Equipment Market 2016–2020,” is available at www.technavio.com.
The Technavio Global 5G Equipment Market report abstract is available online.